The 20% that really matters

How to use the Pareto Principle to your advantage

👋Hello to the 496 Intentional Wisdom'ers receiving today's newsletter! As you might have noticed, I’ve been incredibly focused on exploring the idea of time management lately. Clearly, it's because I've got too much on my plate and am desperately trying to find a release valve. In reality, I'm aspiring to become much more productive than I am today, but to do so in a way that makes me less stressed, not more. Too aspirational? I hope not. Today's article is meant to be a first step in the direction of getting there. I hope it helps you, too.

The big idea

The 80/20 rule, the Pareto Principle, a Power Law distribution... whatever you want to call it, the idea is more or less the same:

Inputs do not equal outputs. Well, not proportionately anyhow.

In fact, the Pareto Principle, first recognized by an Italian economist (Pareto) in the late nineteenth century, shows that it is typically 20% of inputs that drive 80% of the output.

The principle can be witnessed far and wide:

  • In business, typically 20% of clients account for 80% of revenues

  • In government, 20% of the population pays 80% of the taxes

  • In computer science, 20% of code typically accounts for 80% of bugs

  • In healthcare, 20% of patients typically account for 80% of costs

  • In the investment world, 20% of portfolio holdings often account for 80% of returns

  • In language, 20% of words, account for 80% of all communication

  • Even in pandemics, 20% of those infected (super-spreaders) typically transmit 80% of new infections

Once you see it, you can't not see it.

  • In our closets, 20% of our clothes are worn 80% of the time

  • At work, we spend 80% of our time with 20% of our colleagues

  • Even on our phones, 80% of our screen time is spent staring at 20% of our apps (I checked!)

The Pareto Principle is just that, a principle, as opposed to a law, in that it isn't always exact. 80/20 is a split that shows up time and time again in just about every part of our lives and within nature, but sometimes the split can be 90/10 or even 60/40. The point is not the exact split but rather the concept of imbalance.

In his widely acclaimed 1997 classic, The 80/20 Principle, author Richard Koch shows that people typically expect the world to be fair and balanced. However, upon closer review, it is distinctly not. Rather, the natural state is imbalance. As Koch points out, when you put five fish of equal size into a pond together, eventually one will end up a lot bigger than the rest. And that size then becomes a self-perpetuating advantage—the big get bigger. We see this everywhere—from youth sports to big tech.

What we can take away from the Pareto Principle is something we already know: that the fruits of our efforts are not uniformly distributed. A minority of our actions account for a majority of our results.

Last week, I wrote that I think I am pretty average most of the time. When I'm doing routine tasks—answering emails, attending meetings, etc.—I don't think there's anything particularly special about the value I'm adding. And in some areas—don't ask me to pay a bill or respond to a wedding invitation—I am notably below average. Let's call all of these activities collectively: the 80%.

But sometimes, if the stars are aligned (or more realistically if I have managed my time wisely), I might get to sit and think. I might get to write. And that's when I've got at least a snowball's chance in hell of creating something noteworthy. Of doing the 20% of my work that will ultimately drive 80% of the results.

I suspect the same is true for you. Maybe it’s not writing, but something else. An area where you excel.

So how can we practically use this principle to our advantage?

Well, we can't just scrap the 80%. Believe me, I'd rather skip every meeting and pay none of the bills but that looks unlikely. In a way, the 80% is table stakes. The stuff we have to do that gives us the freedom to do the 20%.

But if we take an honest look at what we believe are the activities that are driving the bulk of our results, we may be able to better prioritize where our time is spent.

If the 20% is truly driving the value, we should do everything in our power to invest more time in exactly that area.

And that means doing more of what I'm preaching about all the time:

  • Saying no (I love Derek Sivers' mantra: It's hell yes, or hell no)

  • Delegating (I don't care who you are, you probably need to do more of it. I know I do. Who wants to be my virtual assistant by the way? Kind of not kidding.)

  • Protecting your boundaries so you can focus (I'm looking at you, flow states)

What it really requires is an audit. An unbiased whiteboarding of our actions—where we're actually spending our time; and results—what we're actually getting in return.

If you're anything like me, there will surely be imbalances. But identifying them is a great start. I don't think this is a one-time exercise either. Personally, I think I probably need to do this quarterly at least, as priorities change and responsibilities always seem to grow.

And by the way, I've mostly been discussing this from a work perspective, but it applies everywhere else as well:

  • What 20% of your fitness practices drive 80% of your results?

  • What 20% of your friends give you 80% of your joy?

  • What 20% of the content you consume provides 80% of the value?

Ultimately, the Pareto Principle can be liberating. On the one hand, it may be frustrating to realize that we're 'wasting' 80% of our time, but on the other hand, it's encouraging to have proof that maybe just maybe we do not need to be all things to all people. And that sometimes less is more.

If we can take that simple lesson away from this, I think we'll all be (maybe 80%) better off.

That's it for this week. Thanks as always for reading. See you next Thursday. — Greg


Photo credit: Markus Spiske @ Unsplash

Extra Credit: Three Podcasts and some unsolicited advice for your 20%

Man, I listened to some great podcasts this week!

🎙Richard Koch and Tim Ferriss — I really enjoyed this conversation with the author of The 80/20 Principle. I gained a whole new appreciation/understanding of the world of management consulting and learned a lot about the 80/20 rule. There's a ton of great content that's been written on this subject. Here, I'll give you a headstart on finding it: Click here.

🎙The Compound and Friends — I'm a huge fan of Packy McCormick so when he joined this podcast, I had to listen; even if it did require wading through some serious Strong Island accents. If you're into tech and/or finance, check this one out. Packy is a massively talented writer in the world of tech and talks about some of the latest trends he's seeing from NFTs to crypto (which is back now, btw - thank you, Amazon), and going from newsletter writer to running a VC fund. I'm not quite ready to launch Intentional Wisdom Capital yet, but you'll be first to hear when I do.

🎙Balajis Srinivasan & Patrick O'Shaughnessy — Back when Balajis spoke with Tim Ferriss in March, I described it as the most personally mind-blowing podcast episode I'd listened to in a year. Similarly, his conversation with Patrick O'Shaughnessy did not disappoint. I almost always listen to my podcasts on 1.2x speed to save time, but Balajis' brain is so quick that it tempted me to slow that down. Unfortunately, I was driving, so I just needed to pay extra attention (and tune out the crying baby in the back seat. Sorry, Whit.) Balajis' vision of the future on topics ranging from how we work to how we govern ourselves is intriguing at a minimum and if his past history of predictions is any guide, possibly a harbinger of what's to come.

Okay, that is really it. Have a great week. — Greg